Risk Index Dips Below 1,000 for Argentina

By Sophie Ritzenthaler

In Argentia, the country’s risk index has been closely watched since it reflects how investors view the country’s debt and measures the possibility of a country defaulting on its debt. On Friday, the risk index dipped under 1000, the first time since August of 2019, the new index is currently set at 984. Markets are cheering for libertarian President Javier Milei as the index was at 1,920 points when he took office last December and has been dropping since the beginning of October. The new government under President Milei has drastically cut spending, overturned a deep fiscal deficit, focused on rebuilding foreign reserves, and managed to reign in triple digit inflation. Despite the deep recession and rising poverty rates in Argentina, this cut in spending has gone well with investors. Analysts further explain that the drop in the risk index was due to the government’s efforts in securing a relatively stable macroeconomy and loans for the country being secured through international lending institutions. 

The EMBI index is a worldwide risk indicator, calculated by JP Morgan Chase after being created in the 1990s. Argentina’s Economy Minister advisor, Felipe Núñez said, “Lowering country risk is fundamental for companies to have access to credit and invest in the country, generating more jobs and better pay!”. These positive recent developments should help Argentina to cover its debt obligations and show signs that the country’s economic growth could be leading to recovery.